August 10, 2018

Changes Made to Missouri Prevailing Wage

prevailing wage

New rules for Missouri prevailing wage are taking effect later this month — remember when we talked about all the bills floating around in the state legislature? On August 28, 2018, one of those bills will become law, bringing some changes for workers on public works construction projects.

Which bill won out?

The bill that finally made it to the governor’s desk earlier this month was HB 1729. HB 1729 repeals parts of Missouri’s prevailing wage law, the minimum wage workers can be paid on public works projects. Those who supported the repeal say prevailing wage inflates project costs and getting rid of it will save money on government projects. Prevailing wage supporters, on the other hand, say that its elimination means skilled workers will look for jobs elsewhere.

Rep. Jeff Justus (R-Branson), the bill’s sponsor, believes lower wages will be a good thing, especially in rural parts of Missouri with smaller construction project budgets. Senate Minority Leader Gina Walsh (D-Bellefontaine Neighbors) said that though she didn’t vote for HB 1729, it’s “‘much better than a full repeal.’”

What’s changing with HB 1729?

Most notably, HB 1729 eliminates prevailing wage for projects estimated at or with an accepted bid of $75,000 or less. That’s not many projects, according to Jefferson City Public Works Director Matt Morasch, who said most of the city’s projects are at least $1 million. It also prevents governmental entities from breaking projects into multiple contracts to stay below that $75,000 threshold. If a change order takes the project over $75,000, prevailing wage laws will apply to the over-budget portion of the project.

Prevailing wage rate will also no longer be determined based on where the work was performed, as it was previously. Now, prevailing wage will be paid on a project if there were at least 1,000 reportable work hours for the worker’s occupation in that area. If there were not at least that many hours reported, workers for that occupation will be paid the public works contracting minimum wage. That wage is 120% of the average hourly wage in the locality, so like prevailing wage, it’s different in different parts of the state.

Partial prevailing wage repeal isn’t the only change HB 1729 brings. Here’s a look at what else is new:

  • Eliminates competitive bidding requirements for projects with an accepted bid of $10,000
  • Allows apprentices and entry-level workers to train on-the-job, provided there’s a one-to-one ratio of journeymen to workers-in-training, and sets apprentice wages at 50% of the journeymen’s wage rate
  • Mandates double-time pay for working on Sundays and holidays, time-and-a-half for overtime and a thirty-minute lunch break

What else is happening with prevailing wage in the U.S.?

Several states are making changes to their prevailing wage laws — and it doesn’t always bring about the intended results. Indiana, Michigan, Wisconsin, West Virginia and Kentucky have all repealed prevailing wage in the past few years. Indiana repealed prevailing wage in 2015, and a study by the Midwest Economic Policy Institute showed that productivity and job growth both decreased — and taxpayers didn’t save a dime. Wages dropped, turnover increased and the study concluded that repealing prevailing wage (called Common Construction Wage in Indiana) had a negative effect on the state’s construction industry.

Michigan repealed their prevailing wage law earlier this summer, a move spurred by a citizen petition. Since Gov. Rick Snyder is a supporter of prevailing wage, a group called Supporting Michigan Taxpayers collected nearly 400,000 signatures supporting repeal and presented them to the state legislature for a vote. Called petition initiated legislation, this method of law-making allows the legislature to take a vote, creating new laws without the governor’s signature — which are also immune to being vetoed.

On the other hand, in Ohio, schools are exempt from paying prevailing wage on their construction projects and have been since 1997. The state saved nearly $500 million on school construction in the first four years the law was enacted.

Stay tuned on The Yard for further updates on the effects of this partial prevailing wage repeal.


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